Anne Urquhart (Tasmania, Australian Labor Party) Share this | Hansard source

I will, Madam Acting President. Those listening can draw their own conclusions about the connection between Henny Penny's adventure and the opposition's rhetoric on pricing carbon. I thought that was a much easier story to follow than the story we heard from Senator Joyce in his presentation.

As we are all aware, manufacturing in Australia is under pressure from the resource-fuelled high Australian dollar and overseas competition as the manufacturing industries in our big Asian trading partners mature. But Australian manufacturers and manufacturing workers want to do their part for the environment and for the future, and they realise the opportunities that our changing world presents. Australia is a late starter in the transformation to clean technology due to its access to low-cost fossil fuels. Current global financial conditions, the complex nature of Australia's electricity markets, the cost of renewable energy and the preference of investing institutions for listed assets inhibit the financing of the clean energy sector.

Unfortunately, traditional avenues of finance can often be out of reach for companies looking to make sustainable capital investments in their operations and to commercialise innovative products. The corporation is a mechanism to help mobilise investment in renewable energy, low-emission and energy efficiency projects and technologies in Australia. The corporation will finance Australia's clean energy sector using financial products and structures to address the barriers currently inhibiting investment. Ultimately, Australian manufacturing will get ahead of the game because of the government's willingness to back them in making this important transition. Shell Global CEO Peter Voser rightly noted on ABC TV's 7.30 program last Thursday, '

... Shell as a company is actually very much advocating that we need a price for carbon on a worldwide basis ...we take a very long-term view that the carbon will be priced ...

Global carbon pricing will occur. Smarter, greener technologies and manufactured goods will emerge around the globe. Australia is uniquely placed to capitalise on first-mover advantage by making sure our manufacturers are equipped to produce and are capable of producing solar cells and windmills and the associated infrastructure, and it is necessary to assist producers get their products to market while meeting the demands of a low-carbon future and changing consumer patterns.

We cannot afford to miss this opportunity because our banks and other finance companies are not prepared or able to back Australian innovation and know-how. In terms of lifting our manufacturing industry's competitiveness and getting ahead of the game on a global scale, the Clean Energy Finance Corporation is an essential piece of the picture. This transformation will require substantial capital which the private sector alone may not be able to provide. I am a member of the Senate's Economics Legislation Committee, which held an inquiry into this bill. Submissions to the inquiry all supported the creation of the Clean Energy Finance Corporation. In its submission to this inquiry, the Clean Energy Council suggested that the challenge of developing new energy technologies is not unique to the clean energy sector. The council argues:

... other technologies such as coal and gas generation have enjoyed decades of public support to get to where they are today.

Some level of government support is warranted when long-term investments requiring large amounts of capital are needed to kick-start promising first-of-kind technologies. In the clean energy sector specifically, the Clean Energy Council indicates:

To overcome current market constraints and accelerate commercialization and deployment of low carbon technologies, support is needed in the construction of financial transactions in a way that will enable use of conventional capital markets products such as debt financing, private equity, venture capital and capital from longer term equity investors (like superannuation funds) at an affordable cost.

While all the evidence received by the committee supported the concept of the Clean Energy Finance Corporation, there were a range of options shared to the House of Representatives Standing Committee on Economics. In its evidence to the committee, Treasury stated that it was not aware of concerns from either the finance sector or the green energy sector about how the framework for the Clean Energy Finance Corporation, as contained in the bill, has been designed. I quote:

There is a spectrum of views: 'We need to do it now and we need to do it quickly' to 'We should do more' to some sectors that question the need for the corporation. So there is a broad spectrum of views, but the bill ... reflects the findings of the expert review panel into the Clean Energy Finance Corporation, which was chaired by Jillian Broadbent. Also on that panel were Ian Moore and David Paradice. All three members have extensive experience within the financial sector and the corporate sector.

In its submission to the inquiry, Hydro Tasmania stated that the Clean Energy Finance Corporation offers significant opportunity to build on Hydro's established capabilities in the renewable energy sector. As they are the largest clean energy producer in Australia, I am inclined to listen to them rather than the negativity espoused by those opposite. As a well-established clean energy producer, Hydro Tasmania is continuing to invest in additional renewable energy as well as in the maintenance, upgrade and refurbishment of their existing hydro assets. Hydro concluded their submission calling for:

Expedient passage of the Clean Energy Finance Corporation Bill 2012—

which—

will provide certainty to industry and investors and allow the CEFC to begin assessing eligible clean energy proposals in a timely manner.

I turn to the submission provided by the Beyond Zero Emissions organisation. In particular, the Beyond Zero Emissions organisation is advocating the take-up of concentrating solar thermal power with storage technology to power our country. Concentrating solar thermal is a commercial technology able to provide reliable power 24 hours a day. However, as it is a less mature technology, it is currently not cost competitive with other fossil and renewable technologies. Given the large capital cost component of the cost of solar thermal energy electricity, Beyond Zero Emissions highlight that the Clean Energy Finance Corporation could help this technology be deployed in Australia. And, excitingly, we could build the infrastructure here in Australia using our existing manufacturing expertise.

As with most renewable energy technologies, the up-front capital cost of concentrating solar thermal power represents over 90 per cent of the levelised cost of energy. Consequently the cost of capital, or the effective interest rate on capital investment, has a substantial influence on the economic viability of a project. Using the government bond rate through finance from the Clean Energy Finance Corporation may be able to deliver investment in concentrating solar thermal power. However, to do this, Beyond Zero Emissions state that the Clean Energy Finance Corporation must be allowed to provide at least 75 per cent of the capital investment for concentrating solar thermal power plants. This represents as much as $500 million to $1 billion. At current commercial rates, the levelised cost of electricity for concentrating solar thermal power is over $250 per megawatt hour. If the Clean Energy Finance Corporation allowed 75 per cent of the capital cost to be financed at the government risk-free rate, with the remaining 25 per cent financed at the commercial rate, the levelised cost of electricity could approach $150 per megawatt hour. This composition of debt to equity is typical finance leverage for power infrastructure projects. And this leaves concentrating solar thermal power about $12 to $25 per megawatt hour more expensive than other renewable energies. To achieve investment in concentrating solar thermal power in Australia, we need the Clean Energy Finance Corporation to significantly consider a larger than traditional investment in concentrating solar thermal power.

I thank Hydro Tasmania, Beyond Zero Emissions and all organisations for their submissions to the Senate inquiry. I urge all senators to support this bill and not be spooked by those opposite and their attitude to this most serious issue.